A proposed court enforceable undertaking, offered by the parties involved in a planned merger of local payments service providers, has not persuaded industry participants to change their minds about the merits of the deal.
The ACCC has published the latest round of submissions in its review of the proposed amalgamation of BPAY, eftpos and NPP Australia, which are in response to an undertaking offered by the merger parties earlier this month.
Industry Committee Administration, the company representing the merger parties, has offered a court enforceable undertaking seeking to address concerns that the merger could result in a reduction in investment in and support for eftpos, which would decrease the availability of least cost routing for merchants.
Under the proposed undertaking, the merged entity (to be called AP+) would ensure that eftpos will do everything in its control to make LCR available for three years, and ensure the eftpos scheme and eftpos card-issuing and acceptance infrastructure will be maintained for three years.
There were other undertakings in relation to NPP Australia and BPAY.
The first round of submissions to the ACCC earlier this year focused heavily on the issue of least cost routing. Retailers and merchants are concerned that as consumers use less cash and rely more on debit cards and digital wallets for payments, transaction fees are a growing cost. They want to see more innovation and competition in payments, particularly if it leads to lower costs.
Least cost routing relies on the issuance of dual network debit cards, allowing point of sale transactions to be routed through the eftpos network or Visa or Mastercard.
Restaurant and Catering Australia summed up the view in many submissions when it said the new organisation would “in no way be incentivised to continue pursuing LCR, which would dramatically impact our small business members”.
The latest round of submissions show that the proposed court enforceable undertaking has not persuaded industry participants to change their minds.
The National Retail Association said: “Despite amendments to the proposed amalgamation, the NRA remains opposed to the merger. We are concerned that small business remains without a voice and believe more can be done in the areas of LCR reform.”
The Council of Small Business Organisations Australia said the proposed undertaking does not bind AP+ or the banks to take the necessary actions that will ensure LCR continues to be provided. It said the three-year duration of the undertaking is insufficient and it lacks “clear deliverables”.
COSBOA has called for the inclusion of specific obligations in the undertaking so that it can be monitored, a reporting framework established and a voice at the table for stakeholders.
The Australian Chamber of Commerce and Industry also said it was concerned about the duration of the undertaking, saying: “This does not provide medium-to-long term certainty for small merchants.”
The ACCI said: “The central issue for small business merchants is the increase cost impost imposed by accepting and making everyday transactions with customers and suppliers together with the ongoing barriers to accessing least-cost routing (LCR). We have also expressed our concerns that the current regulatory regime